(March 27): Indonesian stocks recorded their biggest foreign outflow in more than two decades, likely driven by block trades in palm oil maker PT FAP Agri, amid heightened scrutiny on ownership in the wake of MSCI Inc’s investability concerns.
Global funds sold a net US$1.2 billion ($1.54 billion) of the nation’s equities on Thursday, the most since 2005, according to data compiled by Bloomberg. Meanwhile, about US$1.1 billion of shares in the Fangiono family-backed FAP Agri were traded in two blocks on the same day, data show.
While the drivers of the block trades remain unclear, the large transactions come before a looming MSCI decision over Indonesia’s potential downgrade from emerging market status.
A filing on Thursday said FAP Agri’s controlling shareholder Prinsep Management Ltd sold all stakes to its subsidiary PT Prinsep Indo HLD without elaborating the purpose of the transaction. No change in the ultimate beneficial owner resulted from the sale, it added.
FAP Agri did not immediately respond to a Bloomberg request for comment.
“We suspect this could be linked to a one-off block or shareholder movement potentially in names like FAP Agri and the details should become clearer soon,” said Mohit Mirpuri, a partner at SGMC Capital Pte Ltd, referring to the large outflow. “If you strip that out, the regular market flows were relatively modest.”
See also: MSCI deadline tests Indonesia’s resolve to fix opaque ownership
Uploaded by Chng Shear Lane
